US close: Stocks drop on Powell comments, chip sector fears

(Sharecast News) - US stocks fell sharply on Wednesday on the back of bearish comments from the head of the Federal Reserve and renewed trade concerns weighing on the chip sector.

Fed chair Jerome Powell said in a speech at the Economic Club of Chicago that policymakers would need to "wait for greater clarity" before making any further moves on interest rates, saying that the central bank was in "challenging scenario".

Powell said that, with Trump's tariff plans set to spur "higher inflation and slower growth", the Fed's dual-mandate goals "are in tension".

Equity markets, which had traded slightly lower for most of the morning session, extended losses after the comments, sending the Dow down 1.7%, the S&P 500 down 2.2% and the Nasdaq dropping 3.1%. The VIX volatility index jumped 8.4%.

Gold prices, meanwhile, reached a new record, with futures surging 3.5% to $3,352.90 an ounce, while WTI crude rose 2.2% to $62.66 a barrel.

Chip stocks sink

Shares in chipmaker Nvidia dropped 7% after the AI darling warned that it would take a $5.5bn hit this quarter related to the export of its H20 graphics processing units to China, for which it was specially designed. Nvidia said the US government had signalled it would require a license if it were to send chips from the US to China.

"While investors may have been hoping for a change, once again markets have been buffeted by 'Storm Donald' as the US president's trade policy continues to exert pressure on global companies," said AJ Bell head of financial analysis Danni Hewson.

Fellow chipmakers AMD, TSMC, Broadcom and Micron Technology also traded firmly lower.

Also hitting sentiment was ASML after the Dutch semiconductor giant missed forecasts significantly in the first quarter, with chief executive Christophe Fouquet warning that tariffs were "creating a new uncertainty" for both the economy and the sector.

United Airlines, which initially surged at the open, finished in the red despite the carrier posting first-quarter adjusted earnings per share of $0.91, well ahead of analysts' estimates of $0.76.

Data barrage

On the macro front, mortgage applications decreased 8.5% in the week ended 11 April, according to the Mortgage Bankers Association of America, pulling back after a 20% jump the previous week. This was the sharpest decline since late-December.

US retail sales rose by 1.4% in March, following a 0.2% increase in February, as spending spiked in part due to an attempt to front-run the imminent imposition of import tariffs. This was slightly ahead of the consensus estimate of 1.3% and the highest monthly growth in over two years.

US industrial production increased 1.3% year-on-year in March, following February's revised 1.5% increase, while capacity utilisation declined from 78.2% in February to 77.8% last month, according to the Federal Reserve.

Finally, the National Association of Housebuilders' housing market index edged up by one point in April to 40, beating forecasts for a drop to 37.

Dow Jones - Risers

Travelers Company Inc. (TRV) $252.48 1.13%

Boeing Co. (BA) $156.47 0.61%

Chevron Corp. (CVX) $135.36 0.61%

Unitedhealth Group Inc. (UNH) $585.04 0.25%

Johnson & Johnson (JNJ) $153.91 0.19%

Dow Jones - Fallers

Intel Corp. (INTC) $19.23 -5.15%

Microsoft Corp. (MSFT) $371.61 -4.57%

Amgen Inc. (AMGN) $282.64 -3.84%

Apple Inc. (AAPL) $194.27 -3.77%

3M Co. (MMM) $130.46 -3.55%

Cisco Systems Inc. (CSCO) $55.76 -3.30%

Walmart Inc. (WMT) $91.19 -2.96%

Walt Disney Co. (DIS) $82.77 -2.63%

Merck & Co. Inc. (MRK) $76.46 -2.46%

Nike Inc. (NKE) $53.55 -2.33%

S&P 500 - Risers

Nektar Therapeutics (NKTR) $0.61 2.89%

Abbott Laboratories (ABT) $129.70 2.76%

Devon Energy Corp. (DVN) $29.28 2.70%

H&R Block Inc. (HRB) $63.11 2.60%

Newmont Corporation (NEM) $55.97 2.51%

Mosaic Company (MOS) $26.97 2.20%

ProLogis (PLD) $100.29 1.84%

Occidental Petroleum Corp. (OXY) $38.45 1.72%

Lockheed Martin Corp. (LMT) $477.08 1.60%

Northrop Grumman Corp. (NOC) $538.17 1.54%

S&P 500 - Fallers

J.B. Hunt Transport Services Inc. (JBHT) $124.73 -8.86%

Advanced Micro Devices Inc. (AMD) $88.29 -7.49%

Interpublic Group of Companies Inc. (IPG) $23.27 -7.44%

Omnicom Group Inc. (OMC) $71.24 -7.28%

Nvidia Corp. (NVDA) $104.49 -6.56%

Starbucks Corp. (SBUX) $80.76 -5.64%

Meta Platforms Inc. (META) $502.31 -5.37%

Carmax Inc. (KMX) $64.11 -5.34%

Intel Corp. (INTC) $19.23 -5.15%

Ipg Photonics Corp. (IPGP) $51.83 -5.02%

Nasdaq 100 - Risers

Expedia Group Inc. (EXPE) $152.60 1.42%

Dollar Tree Inc (DLTR) $73.21 0.85%

Align Technology Inc. (ALGN) $167.17 0.79%

Mercadolibre Inc. (MELI) $2,064.37 0.71%

Vodafone Group Plc ADS (VOD) $9.17 0.66%

Netflix Inc. (NFLX) $961.63 0.55%

Wynn Resorts Ltd. (WYNN) $73.74 0.42%

Seagate Technology Plc (STX) $72.82 0.07%

Mylan Inc. (MYL) $0.00 0.00%

Maxim Integrated Products Inc. (MXIM) $0.00 0.00%

Nasdaq 100 - Fallers

J.B. Hunt Transport Services Inc. (JBHT) $124.73 -8.86%

Qvc Group Inc Series A (QVCGA) $0.15 -8.75%

Nvidia Corp. (NVDA) $104.49 -6.56%

Asml Holdings N.V. (ASML) $634.93 -6.39%

Starbucks Corp. (SBUX) $80.76 -5.64%

Meta Platforms Inc. (META) $502.31 -5.37%

JD.com, Inc. (JD) $35.33 -5.31%

Intel Corp. (INTC) $19.23 -5.15%

Applied Materials Inc. (AMAT) $138.19 -4.95%

Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $349.59 -4.75%